Following an earlier consultation on proposed alterations to its guidance on penalties for breaching competition law, the Office of Fair Trading (OFT) has published revised guidance on how it will determine such penalties in future.

The changes are intended to allow the OFT to continue to set substantial penalties to deter anti-competitive activity whilst ensuring that penalties are proportionate in the specific circumstances of the individual case.

Under the new system, the maximum starting point for penalty calculations increases from 10 per cent to 30 per cent of relevant turnover. It brings the OFT in line with the approach of the European Commission and many European competition authorities. The statutory maximum level of the fine imposed remains 10 per cent of worldwide turnover, however.

The guidance introduces a new step in the calculation of penalties. In future, the OFT will consider specifically whether a penalty is proportionate ‘in the round’. This change is intended to ensure that the penalty imposed is neither disproportionate nor excessive in the particular circumstances of the case.

Other changes include:

• clarification that the turnover used for calculating the penalty starting point will be based on the last business year before the infringement ended;
• a new formal step at which leniency and settlement discounts are applied; and
• additional detail on the OFT’s approach to awarding discounts for companies taking appropriate steps to comply with competition law.